European stocks slide on fresh market unrest
LONDON, May 19, 2016 (AFP) – European stock markets slid on Thursday, weighed down by the mining and travel sectors, while traders reacted also to concerns about a possible US rate hike next month.
Around 1115 GMT, London’s benchmark FTSE 100 index shed 1.3 percent compared with Wednesday’s close.
Frankfurt’s DAX 30 index lost 1.0 percent and the Paris CAC 40 dropped 0.7 percent.
In foreign exchange, the euro was down against the dollar after minutes from the Federal Reserve’s April policy meeting suggested an interest rate hike next month was a much more serious possibility than the market believed.
“The FTSE 100 is trading sharply lower… after last night’s minutes showed a notable hawkish shift amongst the voting members, bringing the possibility of a US rate hike in June back to the table,” said David Cheetham, market analyst at brokerage XTB.
The US central bank has repeatedly stated its intention to continue raising rates this year after December’s first hike in nine years.
That prospect has already tightened money conditions for borrowers around the world and strengthened the dollar.
The British pound meanwhile reached a three-month high against the euro on Thursday thanks to polls showing the Remain camp in the lead ahead of the June 23 referendum on Britain’s EU membership.
Sterling struck 76.49 pence against the euro at one point, its highest level since early February, with support also from better-than-expected British retail sales data, analysts said.
On the corporate front, shares in travel operator Thomas Cook plunged almost 20 percent after the British company revealed a drop in summer bookings, in particular to key market Turkey, following recent deadly attacks in the country.
Around midday, Thomas Cook was down 17.4 percent at 73.95 pence on London’s second tier index.
Adding to the unease was news that an EgyptAir flight had vanished from radar screens Thursday en route from Paris to Cairo with 66 people on board.
The airline said the cause of the disappearance was unknown.
“The increased potential for a June rate-hike in the US… has sent a ripple of fear through the market as a whole, whilst concerns over the missing EgyptAir plane are continuing to weigh on the travel sector,” said Spreadex analyst Connor Campbell.
Elsewhere, the share price of German chemicals and pharmaceuticals giant Bayer slumped 7.5 percent to 89.20 euros after the company said it was in merger talks with US agricultural firm Monsanto.
Asian stock markets meanwhile closed mostly lower on Thursday, with energy and commodity firms taking a beating.
News that a US interest rate hike was increasingly likely put particular pressure on energy and commodity shares, as oil prices slumped in response to the greenback’s surge.
A stronger dollar puts downward pressure on oil, which is traded in the US currency, as it makes crude more expensive for buyers holding other currencies.
– Key figures around 1115 GMT –
London – FTSE 100: DOWN 1.3 percent at 6,087.54
Frankfurt – DAX 30: DOWN 1.0 percent at 9,845.64
Paris – CAC 40: DOWN 0.7 percent at 4,288.90
EURO STOXX 50: DOWN 0.8 percent at 2,932.25
Tokyo: Nikkei 225: FLAT at 16,646.66 (close)
Shanghai – Composite: FLAT at 2,806.91 (close)
Hong Kong – Hang Seng: DOWN 0.7 percent at 19,694.33 (close)
New York – Dow: DOWN less than 0.1 percent at 17,526.62 (close)
Dollar/yen: DOWN at 109.93 yen from 110.20 yen
Euro/dollar: DOWN at $1.1203 from $1.1218 on Wednesday
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Bayer (isin = DE0005752000)
APRIL (isin = FR0004037125)
CAMPBELL SOUP COMPANY (isin = US1344291091)
THOMAS COOK GROUP (isin = GB00B1VYCH82)
Monsanto (isin = US61166W1018)
